INTERNATIONAL
Russia’s Looks To Build ‘LNG Island’ To Supply Booming Asian Market
While Russia’s gas giant Gazprom is working to complete the Power of Siberia gas pipeline expected to begin delivering gas to China in December 2019, another Russian company—the country’s biggest liquefied natural gas (LNG) producer Novatek—is looking to boost LNG supply to the growing Asian market.
While it continues to keep more than a third of the European gas market with pipeline gas supply, Russia is also increasingly looking east and aiming to take a larger portion of the booming Asian LNG demand, led by China.
Novatek has one producing LNG plant, Yamal, and aims to reach a final investment decision (FID) on another one, Arctic LNG 2, this year.
The Russian firm has recently signed a preliminary agreement with Japan’s Saibu Gas, under which the companies will consider potential cooperation in entering the end-consumer LNG market in Asia. Novatek will optimize its LNG supplies to the Asia-Pacific region by using Saibu Gas’s Hibiki LNG terminal in Japan.
“The Asia-Pacific region is a priority destination for NOVATEK’s LNG projects. Our ability to use the Hibiki terminal will help diversify our customer base and increase the flexibility of deliveries to the premium LNG markets,” Novatek’s First Deputy Chairman of the Management Board Lev Feodosyev said last month.
Novatek also plans to build, with the support of Russia’s government, a marine LNG transshipment complex in the Kamchatka Peninsula in Russia’s Far East, close to the Asian markets.
“The construction of the Kamchatka transshipment complex will increase the efficiency of LNG deliveries from the Arctic zone by optimizing transport logistics,” Novatek’s Chairman of the Management Board, Leonid Mikhelson, said last September.
“We plan to create a Russian LNG hub for shipments to consumers in the Asia-Pacific region. This investment will contribute to the development of the Northern Sea Route allowing for the optimal use of the existing Arctic tanker fleet,” Mikhelson noted.
Japan’s Saibu Gas, for its part, said this week that it would consider building two additional LNG tanks and upgrade its re-exporting capability.
Thanks to LNG storage hubs closer to Asian markets, Novatek could cut shipping costs and better meet spot demand in Asia, China in particular, according to analysts who spoke to Bloomberg.